AXA Business Insurance reports a rise of 162 per cent from 2009-2012 with British businesses ultimately having to foot the bill.
In 2012 alone, AXA saw a year on year rise of 75 per cent in the number of deafness claims and had more claims for deafness than any other type of workplace injury or illness. The company attributes the rise as a primary reason for an overall increase of over 30 per cent in Employer Liability claims.
The insurer is concerned that the rise in claims is being fuelled by compensation lawyers and claims management companies targeting potential claimants. And while there are obviously many genuine claims, the company has also seen evidence of a growing number of fraudulent claims. It believes the trend in these claims has many similarities to the massive rise in personal injury claims among drivers over the last few years.
David Williams, managing director, Underwriting, AXA Insurance, said: “The issue for British industry is that, as we have seen with other areas of insurance in the UK, lots of claims inevitably lead to higher premiums in order to cover the cost of payouts. As British business struggles through a prolonged period of recession, the last thing they need is the added expense that this will bring.
“We are very keen to work with British businesses, the rest of the insurance industry and government to put in place effective measures to stop this becoming the next whiplash.”
According to HSE statistics, around one million people in Great Britain are exposed to levels of noise that could affect their hearing. Current Control of Noise regulations require all employers to provide protection in any working environment where decibel levels exceed 85.
David Williams concluded: “We would urge employers to be really thorough in ensuring employees are provided with proper protection and that using it correctly is robustly enforced. By doing this they can help us nip this growing problem in the bud before it starts impacting on their bottom line.”
Firms employing one or more people are required by law to have Employers’ Liability insurance, however in a recent survey, 47 per cent of respondents were unaware it’s illegal to employ staff (unless family) without this cover.
The minimum level of EL cover required for a business is £5m. It protects businesses and trades people against claims for compensation from existing and former employees who are injured or become ill as a result of their work activities.
Firms employing close relatives and not a limited company or those where the owner is the sole employee and owns at least 50 per cent of the company’s issued share capital are exempt.
In 2011, insurers paid out £1 billion in Employers Liability claims and other expenses.
YOUR Insurance marketing manager, Annie Plaskett, commented: “It’s concerning to see how many people appear unaware of their legal obligations. Anyone employing full or part-time staff, sub-contractors, work experience students or volunteers should have this compulsory cover in place. Without it, the financial consequences could be severe.”
Your staff and colleagues possess information about your business that could harm you if they leave – it makes sense to protect yourself.
It is a fear that haunts every business owner – that one day a trusted colleague will walk out the door and set up in competition taking vital customer information, trade secrets and even key staff with them.
To avoid this horrifying scenario a growing number of employers now insert a “restrictive covenant” in contracts to protect their businesses. Briefly this is a clause that prevents former employees from approaching customers or using knowledge obtained at a prior employment. Such contracts are usually more associated with key personnel at blue chip companies and we’ve all read about
departing directors from, say, Marks & Spencer or managers from Premier League clubs being placed on “gardening leave” to prevent them immediately joining a rival. But such clauses increasingly make sense for smaller concerns as employment lawyer Geoff Tyler points out “A restrictive covenant makes sense in any concern which is in the business of selling and which employs sales people.
“What it seeks to prevent is someone building up a network on your time and on your expense account.” says Tyler a partner at employment law firm Pinsent Masons. “This can apply to even smaller businesses such as a hairdressers or insurance brokers which rely on customer loyalty built up over the years and not want to see that walk out the door.”
Even if an employer has no intention of ever going to court these clauses can be useful. “Restrictive covenants certainly have a deterrent effect.” says Tyler. “If you point out to someone what is in their contract then they may think twice.” Restrictive covenants can take many forms but three of the most common are:
Whereby a former employee is prevented from directly competing or working for a competitor within a specific radius or within a specific period such as six months from departure.
This is subtly different and prevents a former employee from working with clients, customers or sub-contractors for a specific period, again typically six months from termination.
Former employees are prevented from taking key staff again for a specific period of time after termination. There are pitfalls for the unwary employer. If they want their restrictive covenant clauses to be binding business owners should be mindful that they may have to justify every restriction. One obstacle that disgruntled employers may face in court is that a restriction must not be seen to be unduly repressive or prevent someone from making a living.
Clauses have to be as tightly focused and relevant to an employee’s situation
A “one size fits all” clause dished out to all staff will not be looked upon kindly by a court. Timescale should be well defined. Preventing someone from setting up in competition within, say, 12 or six months may be more enforceable than something more open ended. Geographical restrictions too might also be hard to justify if it goes beyond a radius of say, six to 12 miles. The information being protected also needs to be relevant and a court may be more inclined to protect trade secrets than lower value customer information. One of the problems with enforcing restrictive covenants is proving that they have been breached and employers may have to resort to monitoring phone call and email traffic if they are to have enough evidence to persuade a court.
Before rushing into court an employer must sit back, take a deep breath and ask themselves key questions before committing to spending large amounts of time and money. What is the best course of action for the business and does the amount of money to be saved by the action justify the legal expenses incurred? But at the same time they must ensure they get the best advice. Employment lawyer Alex Denny has known of businesses that have suffered because the applicant did not take enough action and advice early on.
”There are no short cuts when your business is at stake,” says Denny who is head of employment law at Faegre Baker Daniels. “You have to take legal advice early and follow that advice. If you do that you will be in control in any litigation that follows.”
- Put together a contingency plan. Prepare for bad weather so that your business can continue to operate even if you or your staff can’t make it into work.
- If you have business premises that are going to be left vacant over the weekend or because staff are unable to make it in, ensure that the heating is left on low. Burst pipes are a huge risk once the temperature dips below freezing and can cause tens of thousands of pounds worth of damage, not to mention destroying important documents and equipment. Added to which, the clean up process can mean continued disruption to your business for several weeks.
- If you need to leave your premises unattended during poor weather, ensure you lock up properly. A savvy thief will make the most of your absence if you don’t secure it.
- Ideally, avoid driving anywhere if there is snow and ice on the roads. But if you absolutely have to be on the road for work, leave extra time and drive with extra care. The numbers of accidents in poor weather are double that of normal conditions
- And if you are out and about in your vehicle, ensure you pack a shovel, blanket, and something to eat and drink in case the worst happens. And ensure your windscreen wash is topped up, your mobile is fully charged and your tyres are fit for winter weather.
- Avoid slip and trip accidents. These accidents increase in the winter due to ice and snow. Public liability insurance will pay out if one of your customers slips on the way to visit your premises, but it’s best to avoid accidents by gritting walkways and driveways.
- If you find you have to work from home when you are normally in business premises, check that your business cover extends to equipment used in your home.
Darrell Sansom, managing director of AXA Business Insurance said: “Winter weather can mean real problems for small businesses and while the focus might be on simply keeping things going during the bad weather, there are many other potential hazards that business owners should be prepared for. We would urge people to spend just a bit of time ensuring that they protect themselves and their business as best as possible.”
As the number of people who work from home continues to rise, statistics from AXA Business Insurance suggest that the majority of the 5.4 million homeworkers in the UK are, probably unknowingly, operating without the insurance cover they need and over half are potentially breaking the law in the process.
According to research from AXA, 16 per cent (over 850,000) of homeworkers employ one or more people yet only three per cent (around 150,000) have employer’s liability insurance. Meanwhile just 14 per cent (approx 750,000) of homeworkers surveyed say they have business car insurance yet 66 per cent (over three and a half million) use their cars for business purposes. In both instances this would mean they are operating illegally.
And aside from the legal requirements of insuring yourself if you work at home, AXA is also warning people to be aware that they should inform their home contents provider if they are working from home or they could risk invalidating their policy.
For the 10 per cent of homeworkers who meet clients in their home, or the 30 per cent who visit clients’ premises, AXA advises that public liability insurance should be considered to protect against any accidents. Meanwhile, only eight per cent have professional indemnity insurance to cover themselves for legal liability in the event of providing customers with poor advice.
One in four homeworkers admitted they were putting their businesses at risk through neglecting their insurance needs as they would not know how to fund any shortcomings if they needed to make a claim and had insufficient cover.
Darrell Sansom, managing director of AXA Business Insurance, said: “The number of people working from home has grown by over 20 per cent in the last ten years or so but our research shows that these people take a more relaxed view on insurance than those working from business premises. We appreciate that generally there is no intention to break the law and that insurance is possibly not top of the priority list for many people. However, it is absolutely vital that homeworkers check what they need to be covered for and, at the very least, meet legal requirements. We would also strongly recommend that people consider what other cover they need to protect what is, in many cases, their livelihoods.”
Insurances to consider for a home-based business:
- Employers’ liability
Although 84 per cent of the respondents had just one employee, this insurance is still mandatory, depending on how the business has been set up.
- Motor insurance
If you use your car for business, then you need to declare this and amend your car insurance to cover business usage. Your private motor insurer may well be able to offer the cover you need, or you can buy a specific business insurance policy.
- Contents insurance
If working from home, even for a portion of the working week, you must declare this to your insurer. You could invalidate your home insurance policy if you do not advise them.
- Buildings insurance
Consider combining cover for your home and home office.
- Public liability
If you go to clients’ premises, or they come to you, then you should consider this.
- Professional indemnity
This is important cover for many as it pays out for claims of negligence or poor advice – compensation and legal defence costs can be very expensive.
- Product liability
If your business involves supplying products to the public, you will need this cover to protect you for claims against injury or damage from your goods. This often comes with public liability insurance.
- Goods in transit
This will cover you for products or other items you send to customers. If you are using a specialist carrier, they may have a certain amount of insurance in place already but always check this, particularly for valuable items.